Minnesotans like Bean have redistributed thousands of dollars—in some cases, tens or hundreds of thousands—to neighbors in need in recent months. Everyday people are adopting rent to help support families who have lost their primary earner or have been unable to go to work throughout Operation Metro Surge.
But as the daughter of an accountant, one small fear has nagged at me since December: Are they going to owe taxes on that money?
It’s one thing for a nonprofit to collect funds. But what if you’re an individual, receiving donations from dozens and dozens of other individuals, and then distributing that money to a few families in need?
A surprise tax bill on $70K would be the stuff of nightmares, a horrible punishment for the crime of trying to do something good for the community. So I sat down with local tax experts to talk about the IRS-related implications of mutual aid.
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